Google, Pepsi, And The New Generation Of Philanthropists

The head of the Global Philanthropy Forum on what the future of giving—both from individuals and corporations—holds.

The world of philanthropy has changed dramatically over the past 10 years. No one knows this better than Jane Wales, founding president of the Global Philanthropy Forum, a project of the World Affairs Council of Northern California that puts on a series of events aiming to build a globally-minded community of social investors and donors. We spoke to Wales about her thoughts on the past, present, and future of philanthropy in advance of GPF’s annual conference.

Co.Exist: Your first conference was in 2002. How would you say the world of philanthropy has changed since then?

Jane Wales: I’d say it has changed in two ways. One is just in size and diversity, and so we’re seeing very significant numbers of new entrants to the field who are perhaps newly wealthy because they’re in these fast growing companies, or because they’re in an emerging economy. It’s both expanding within the U.S. and North America more generally, but also throughout the world. Change number two is in the character of philanthropy. There is this tendency to define philanthropy broadly, to really mean all private means of financing social change. So it’s both grantmaking from your endowment but it’s also investments from the endowment yourself. Or if you lead a company, it’s the shared value agenda in which you’re trying to put your company to the service of social change. In essence what you’re trying to do is make positive social change intrinsic to the company.

I’d also say that the [philanthropic] individuals themselves tend to be very young. They’re in the midst of their career, the height of their career, and they’re not about to retire. So they’re pretty bold in their investments for social change and they have a very long timeline. Maybe some look for silver bullets, but by and large I’d say this is a really thoughtful generation of philanthropists who know they’re taking on hard problems, who know that it will be a tough slog. They try to learn from the setbacks and successes of their predecessors.

This is probably the first generation that I’m not saying, why aren’t they more like we were? I’m saying, why weren’t we more like they are?

Was there an event or something that happened that spurred this change in philanthropy?

All I can say is it seems to flow from the skillset that many of these folks have. Most of them come out of the private sector, and they’re applying some of the tools and approaches that they honed there. The other part of it is just the sheer magnitude of the problems they take on. But otherwise, this may relate to an entire cultural shift. This is probably the first generation that I’m not saying, why aren’t they more like we were? I’m saying, why weren’t we more like they are? They know what they’re up against. They know what they want to build. This is a great generation.

How do you define philanthropy?

I define it to mean all ways of financing positive social change, and I think that’s the right definition because most people who self-define as philanthropists use multiple tools. There’s social investing, a lot of philanthropists look at volunteering, and those who lead companies make decisions that would advance shared value. When we started, I’d say 90% [of philanthropists we work with] were focused on making grants, 10% were exploring this new notion of social investing. Now I’m guessing that well over 50% of our members use more than one tool.

In our upcoming conference, we’re going to have a panel on shared value in India. What you’re seeing is a leapfrogging going on. They want to know about impact investing, they want to know about shared value, they want to know about all these things beyond grants. They’re going straight from charity to this more complex set of tools

I’ve noticed recently more philanthropy coming from corporations themselves. The one that most readily comes to mind is the Pepsi Refresh Project, where they gave money for grants instead of spending it on Super Bowl ads. Do you see that as a trend?

It is, but it could be interrupted. It’s really important to reinforce this trend and think about what could interrupt it so that it stays with us, because I think it just has huge potential. GE is looking at how to take their core technologies and use them for needs that are particular to the developing world, like an inexpensive ultrasound technology. This is increasingly being seen in some of the biggest companies in the world, and their capacity to do good is mammoth.

If investors believe that there is a huge cost associated with doing the most socially advantageous thing, then that raises questions.

Having said that, Pepsi, which has been one of the best companies in this regard, is experiencing a decline in their market value. Whether it has anything to do with their desire to emphasize more nutritious food, less sugary drinks, I don’t know. That has people like me a little bit nervous, because if investors believe that there is a huge cost associated with doing the most socially advantageous thing, then that raises questions. It will be a case to watch.

I think that sometimes there could be a cost for these things now that pays off later. People don’t always realize that.

That’s always been the big barrier. The timeline on social change is not quarterly. So what you have to have is a fundamental change in expectations on the part of the investment community, the consumer base, etcetera.

The timeline on social change is not quarterly. So what you have to have is a fundamental change in expectations on the part of the investment community and the consumer base.

Do you see that happening?

No, I mean, that’s such a fundamental shift. But I think there’s a normative shift going on. A lot of things are being done because CEOs believe it’s important, they’re committed, and because their employee base thinks it’s important. They know if they want to get the best employees, they need to stand for something beyond any one product. But I think it’s up to us to show that they do attract customers as a result.

It seems like if a company is making a lot of money, they’re expected to give a fair amount back. And if they don’t, they get a lot of heat. You see this with Apple, for example. Is that something new?

I think it’s something that’s part of this overall normative shift. You saw this in the '60s and '70s, and then it went quiet. The interesting thing is we’re seeing it from consumers, we’re seeing it from the broad public, it’s affecting consumer choices. You cited a company with products that are extraordinarily popular. It’s a lot easier when you’re choosing between grocery stores.

So you’re seeing consumer behavior change and as I mentioned earlier, you’re seeing employee attitudes change. I think it’s measured in ways beyond grantmaking, though. Take Google as an example. Google for quite a while wasn’t making large grants. It was instead leveraging its employee base, giving them the time and space to invent, to define applications of search technology that can advance the social good. So there were a lot of happy Google employees when the company was not focused on grants but was focused on social change by other means. Now they’re back to grantmaking in quite a big way. I think in both instances it makes Googlers proud.

Ariel Schwartz is a Senior Editor at Co.Exist. She has contributed to SF Weekly, Popular Science, Inhabitat, Greenbiz, NBC Bay Area, GOOD Magazine and more. For story ideas: ariel[at]fastcompany.com Continued